[Federal Register Volume 63, Number 130 (Wednesday, July 8, 1998)]
[Notices]
[Pages 37026-37028]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-18267]



[[Page 37025]]

_______________________________________________________________________

Part V





Department of Education





_______________________________________________________________________



William D. Ford Federal Direct Loan Program; Federal Family Education 
Loan Program; Notice

Federal Register / Vol. 63, No. 130 / Wednesday, July 8, 1998 / 
Notices

[[Page 37026]]



DEPARTMENT OF EDUCATION


William D. Ford Federal Direct Loan Program; Federal Family 
Education Loan Program

AGENCY: Office of Postsecondary Education, Department of Education

ACTION: Notice of interest rates for the William D. Ford Federal Direct 
Loan Program and the Federal Family Education Loan Program for the 
period July 1, 1998, through June 30, 1999.

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SUMMARY: The Assistant Secretary for Postsecondary Education announces 
the interest rates for variable-rate loans made under the William D. 
Ford Federal Direct Loan (Direct Loan) Program and the Federal Family 
Education Loan (FFEL) Program for the period July 1, 1998-June 30, 
1999.

FOR FURTHER INFORMATION CONTACT: For the FFEL Program: Brian Smith, 
Program Specialist. For the Direct Loan Program: Barbara F. Grayson, 
Program Specialist. Mailing address: Policy Development Division, 
Office of Postsecondary Education, U.S. Department of Education, Room 
3045, ROB-3, 600 Independence Avenue, SW, Washington, DC 20202-5345. 
Telephone: (202) 708-8242. Individuals who use a telecommunications 
device for the deaf (TDD) may call the Federal Information Relay 
Service (FIRS) at 1-800-877-8339 between 8 a.m. and 8 p.m., Eastern 
Daylight time, Monday through Friday.
    Individuals with disabilities may obtain this document in an 
alternate format (e.g., Braille, large print, audiotape or computer 
diskette) on request to the contact persons listed in the preceding 
paragraph.

SUPPLEMENTARY INFORMATION:

General

    Section 455(b) of the Higher Education Act of 1965, as amended (the 
HEA), 20 U.S.C. 1087e(b), provides that variable interest rates apply 
to loans made under the Direct Loan Program. Section 427A of the HEA, 
20 U.S.C. 1077a, provides that variable interest rates apply to certain 
loans made under the FFEL Program. The variable rates for Direct Loan 
Program loans and FFEL Program loans are determined annually and apply 
for each 12-month period beginning July 1 and ending June 30.
    The formulas for determining the interest rates charged to 
borrowers for Direct Loan Program and FFEL Program loans, except for 
Consolidation loans in both programs, are provided in the following 
legislation:
    <bullet> For Direct Loan Program loans for which the first 
disbursement is made before July 1, 1998, section 455 of the HEA (20 
U.S.C. 1087e).
    <bullet> For FFEL Program loans for which the first disbursement is 
made before July 1, 1998, section 427A of the HEA (20 U.S.C. 1077a).
    <bullet> For FFEL Program loans and Direct Loan Program loans for 
which the first disbursement is made on or after July 1, 1998, and 
before October 1, 1998, section 8301 of Pub.L. 105-178 (the 
Transportation Equity Act for the 21st Century).
    The interest rate calculations for all parent and student loans in 
the Direct Loan and FFEL programs for which the first disbursement is 
made on or after July 1, 1998, and before October 1, 1998, are based on 
the bond equivalent rate of the 91-day Treasury bills auctioned at the 
final auction held before June 1.
    The formulas for determining the interest rates charged to 
borrowers of Direct Consolidation loans and FFEL Consolidation loans 
are provided in the following legislation and regulation:
    <bullet> For Direct Consolidation loans, 34 CFR 685.215(g).
    <bullet> For FFEL Consolidation loans for which the consolidation 
loan application was received by an eligible lender before November 13, 
1997, section 428C(c)(1) of the HEA (20 U.S.C. 1078-3(c)(1)).
    <bullet> For FFEL Consolidation loans for which the consolidation 
loan application was received by an eligible lender on or after 
November 13, 1997, and before October 1, 1998, section 428C(c)(1)(D) of 
the HEA, 20 U.S.C. 1078-3(c)(1)(D) (as added by the Emergency Student 
Loan Consolidation Act of 1997).
    Section 455(g) of the HEA, 20 U.S.C. 1087e(g), gives the Secretary 
discretion to establish the interest rates for Direct Consolidation 
loans. Under 34 CFR 685.215(g), for consolidation loans, the interest 
rate is the same as the interest rate for student and parent loans made 
during that time.
    As described later in this notice, the interest rate for FFEL 
Consolidation Loans is set by statute.
    The bond equivalent rate of the 91-day Treasury bills auctioned at 
the final auction held before June 1 of each year is used as the index 
to calculate annual interest rates charged to borrowers with the 
following loans:
    Federal Direct Stafford/Ford loans (Direct Subsidized).
    Federal Direct Unsubsidized Stafford/Ford loans (Direct 
Unsubsidized).
    Federal Direct Subsidized Consolidation loans.
    Federal Direct Unsubsidized Consolidation loans.
    FFEL Stafford loans (subsidized and unsubsidized).
    FFEL Consolidation loans for applications received on or after 
November 13, 1997.
    Federal Direct PLUS loans for which the first disbursement is made 
on or after July 1, 1998.
    Federal Direct PLUS Consolidation loans made on or after July 1, 
1998.
    FFEL PLUS loans for which the first disbursement was made on or 
after July 1, 1998.
    The bond equivalent rate of the 52-week Treasury bills auctioned in 
the final auction held before June 1 of each year is used to calculate 
annual interest rates charged to borrowers with the following loans:
    Federal Direct PLUS loans for which the first disbursement was made 
before July 1, 1998.
    Federal Direct PLUS Consolidation loans for which the first 
disbursement was made before July 1, 1998.
    FFEL PLUS loans for which the first disbursement was made before 
July 1, 1998.
    FFEL Supplemental Loans for Students (SLS).
    The bond equivalent rate of the 91-day Treasury bills auctioned on 
May 26, 1998, is 5.155 percent, which rounds to 5.16 percent.
    The bond equivalent rate of 52-week Treasury bills auctioned on May 
21, 1998, is 5.434 percent, which rounds to 5.43 percent.

William D. Ford Federal Direct Loan Program

Interest Rates for Direct Subsidized, Direct Unsubsidized, Direct 
Subsidized Consolidation, and Direct Unsubsidized Consolidation Loans

    1. Direct Subsidized, Direct Unsubsidized, Direct Subsidized 
Consolidation, and Direct Unsubsidized Consolidation Loans for which 
the first disbursement was made prior to July 1, 1995--the interest 
rate may not exceed 8.25 percent: Pursuant to section 455(b)(1) of the 
HEA, 20 U.S.C. 1087e(b)(1), the interest rate for the period July 1, 
1998, through June 30, 1999, is 8.25 percent (5.16 percent plus 3.1 
percent equals 8.26 percent, which exceeds the 8.25 percent cap).
    2. Direct Subsidized, Direct Unsubsidized, Direct Subsidized 
Consolidation, and Direct Unsubsidized Consolidation Loans for which 
the first disbursement was made on or after July 1, 1995, and before 
July 1, 1998--the interest rate may not exceed 8.25 percent:
    (a) During the in-school, grace, and deferment periods: Pursuant to 
section

[[Page 37027]]

455(b)(2) of the HEA, 20 U.S.C. 1087e(b)(2), the interest rate for the 
period July 1, 1998, through June 30, 1999, is 7.66 percent (5.16 
percent plus 2.5 percent equals 7.66 percent).
    (b) During all other periods: Pursuant to section 455(b)(1) of the 
HEA, 20 U.S.C. 1087e(b)(1), the interest rate for the period July 1, 
1998, through June 30, 1999, is 8.25 percent (5.16 percent plus 3.1 
percent equals 8.26 percent, which exceeds the 8.25 percent cap).
    3. Direct Subsidized and Direct Unsubsidized Loans for which the 
first disbursement is made on or after July 1, 1998, and before October 
1, 1998--the interest rate may not exceed 8.25 percent:
    (a) During the in-school, grace, and deferment periods: Pursuant to 
section 8301 of Pub. L. 105-178, the interest rate for the period July 
1, 1998, through June 30, 1999, is 6.86 percent (5.16 percent plus 1.7 
percent equals 6.86 percent).
    (b) During all other periods: Pursuant to section 8301 of Pub.L. 
105-178, the interest rate for the period July 1, 1998, through June 
30, 1999, is 7.46 percent (5.16 percent plus 2.3 percent equals 7.46 
percent).
    4. Direct Subsidized Consolidation and Direct Unsubsidized 
Consolidation Loans for which the first disbursement is made on or 
after July 1, 1998, or for which the consolidation loan application is 
received by the Secretary on or after July 1, 1998--the interest rate 
may not exceed 8.25 percent:
    (a) During the in-school, grace, and deferment periods: Pursuant to 
section 455(g) of the HEA, 20 U.S.C. 1087e(g) and 34 CFR 685.215(g), 
the interest rate for the period July 1, 1998, through June 30, 1999, 
is 6.86 percent (5.16 percent plus 1.7 percent equals 6.86 percent).
    (b) During all other periods: Pursuant to section 455(g) of the 
HEA, 20 U.S.C. 1087e(g) and 34 CFR 685.215(g), the interest rate for 
the period July 1, 1998, through June 30, 1999, is 7.46 percent (5.16 
percent plus 2.3 percent equals 7.46 percent).

Interest Rates for Direct PLUS and Direct PLUS Consolidation Loans

    1. Direct PLUS loans and Direct PLUS Consolidation loans for which 
the first disbursement was made before July 1, 1998: Pursuant to 
section 455(b)(4) of the HEA, 20 U.S.C. 1087(e)(b)(4), the interest 
rate for the period July 1, 1998, through June 30, 1999, is 8.53 
percent (5.43 percent plus 3.1 percent equals 8.53 percent).
    2. Direct PLUS loans for which the first disbursement is made on or 
after July 1, 1998, and before October 1, 1998--the interest rate may 
not exceed 9 percent: Pursuant to section 8301 of Pub.L. 105-178, the 
interest rate for the period July 1, 1998, through June 30, 1999, is 
8.26 percent (5.16 percent plus 3.1 percent equals 8.26 percent).
    3. Direct PLUS Consolidation loans for which the first disbursement 
is made on or after July 1, 1998, or for which the consolidation loan 
application is received by the Secretary on or after July 1, 1998--the 
interest rate may not exceed 9 percent: Pursuant to section 455(g) of 
the HEA, 20 U.S.C. 1087e(g) and 34 CFR 685.215(g), the interest rate 
for the period July 1, 1998, through June 30, 1999, is 8.26 percent 
(5.16 percent plus 3.1 percent equals 8.26 percent).

Federal Family Education Loan Program

Interest Rates for ``Converted'' Variable-rate FFEL Stafford Loans

    1. FFEL Stafford loans which were made with an interest rate of 
eight percent with an increase to ten percent and that were subject to 
the ``windfall profits'' provisions of section 427A(i)(1) of the Act, 
20 U.S.C. 1077a(i)(7), and that have been converted to a variable 
interest rate--the interest rate may not exceed 10 percent: Pursuant to 
section 427A(i)(7)(A) of the HEA, 20 U.S.C. 1077a(i)(7)(A), the 
interest rate for the period July 1, 1998, through June 30, 1999, is 
8.41 percent (5.16 percent plus 3.25 percent equals 8.41 percent).
    2. Seven percent, eight percent, nine percent and eight/ten percent 
loans that were subject to the ``windfall profits'' provisions of 
section 427A(i)(3) of the HEA, 20 U.S.C. 1077a(i)(3), and that have 
been converted to a variable interest rate--the interest rate may not 
exceed seven percent, eight percent, nine percent, or ten percent, 
respectively: Pursuant to section 427A(i)(7)(A) of the Act, 20 U.S.C. 
1077a(i)(7)(A), the interest rate for the period July 1, 1998, through 
June 30, 1999, is 7 percent for 7 percent loans, 8 percent for 8 
percent loans, 8.26 percent for 9 percent loans, and 8.26 percent for 
10 percent loans (5.16 percent plus 3.1 percent equals 8.26 percent, 
which exceeds the cap for 7 percent loans and 8 percent loans).

Interest Rates for Regular Variable-rate FFEL Stafford Loans

    1. FFEL Stafford loans made to ``new'' borrowers for which the 
first disbursement was made (a) on or after October 1, 1992, but before 
July 1, 1994, or (b) on or after July 1, 1994, for a period of 
enrollment ending before July 1, 1994, (i.e., a late disbursement)--the 
interest rate may not exceed 9 percent: Pursuant to section 427A(e)(1) 
of the HEA, 20 U.S.C. 1077a(e)(1), the interest rate for the period 
July 1, 1998, through June 30, 1999, is 8.26 percent (5.16 percent plus 
3.1 percent equals 8.26 percent).
    2. FFEL Stafford loans made to all borrowers, regardless of prior 
borrowing, for a period of enrollment that includes or begins on or 
after July 1, 1994, for which the first disbursement was made on or 
after July 1, 1994, but before July 1, 1995--the interest rate may not 
exceed 8.25 percent: Pursuant to section 427A(f)(1) of the HEA, 20 
U.S.C. 1077a(e)(1), the interest rate for the period July 1, 1998, 
through June 30, 1999, is 8.25 percent (5.16 percent plus 3.1 percent 
equals 8.26 percent which exceeds the 8.25 percent cap).
    3. FFEL Stafford loans made to all borrowers, regardless of prior 
borrowing, for which the first disbursement was made on or after July 
1, 1995, but before July 1, 1998--the interest rate may not exceed 8.25 
percent:
    (a) During the in-school, grace, or deferment period: Pursuant to 
section 427A(g)(2) of the HEA, 20 U.S.C. 1077a(g)(2), the interest rate 
for the period July 1, 1998, through June 30, 1999, is 7.66 (5.16 
percent plus 2.5 percent equals 7.66 percent).
    (b) During the repayment period (except deferment periods): 
Pursuant to section 427A(f)(1) of the HEA, 20 U.S.C. 1077a(f)(1), the 
interest rate for the period July 1, 1998, through June 30, 1999, is 
8.25 percent (5.16 percent plus 3.1 percent equals 8.26 percent, which 
exceeds the 8.25 percent cap).
    4. FFEL Stafford loans, for which the first disbursement is made on 
or after July 1, 1998, but before October 1, 1998--the interest rate 
may not exceed 8.25 percent:
    (a) During the in-school, grace, and deferment periods: Pursuant to 
section 8301 of Pub.L. 105-178, the interest rate for the period July 
1, 1998, through June 30, 1999, is 6.86 percent (5.16 percent plus 1.7 
percent equals 6.86 percent).
    (b) During all other periods: Pursuant to section 8301 of Pub.L. 
105-178, the interest rate for the period July 1, 1998, through June 
30, 1999, is 7.46 percent (5.16 percent plus 2.3 percent equals 7.46 
percent).

Interest Rates for FFEL PLUS and FFEL Supplemental Loans for Students 
Loans

    1. Variable-rate FFEL PLUS loans and FFEL SLS loans made before 
October 1, 1992--the interest rate may not exceed 12 percent: Pursuant 
to section 427A(c)(4)(B) of the HEA, 20 U.S.C. 1077a(c)(4)(B), the 
interest rate for the period July 1, 1998, through June 30,

[[Page 37028]]

1999, is 8.68 percent (5.43 percent plus 3.25 percent equals 8.68 
percent).
    2. FFEL SLS loans for which the first disbursement was made on or 
after October 1, 1992, for a period of enrollment beginning before July 
1, 1994--the interest rate may not exceed 11 percent: Pursuant to 
section 427(c)(4) of the HEA, 20 U.S.C. 1077a(c)(4), the interest rate 
for the period July 1, 1998, through June 30, 1999, is 8.53 percent 
(5.43 percent plus 3.1 percent equals 8.53 percent).
    3. FFEL PLUS loans for which the first disbursement was made on or 
after October 1, 1992, but before July 1, 1994--the interest rate may 
not exceed 10 percent: Pursuant to section 427A(c)(4)(D) of the HEA, 20 
U.S.C. 1077a(c)(4)(D), the interest rate for the period July 1, 1998, 
through June 30, 1999, is 8.53 percent (5.43 percent plus 3.1 percent 
equals 8.53 percent).
    4. FFEL PLUS loans for which the first disbursement was made on or 
after July 1, 1994 but prior to July 1, 1998--the interest rate may not 
exceed 9 percent: Pursuant to section 427(c)(4)(E) of the HEA, 20 
U.S.C. 1077a(c)(4)(E),the interest rate for the period July 1, 1998, 
through June 30, 1999, is 8.53 percent (5.43 percent plus 3.1 percent 
equals 8.53 percent).
    5. FFEL PLUS loans for which the first disbursement is made on or 
after July 1, 1998, and before October 1, 1998--the interest rate may 
not exceed 9 percent: Pursuant to section 8301 of Pub.L. 105-178, the 
interest rate for the period July 1, 1998, through June 30, 1999, is 
8.26 percent (5.16 percent plus 3.1 percent equals 8.26 percent).

Interest Rates for FFEL Consolidation Loans

    1. FFEL Consolidation loans made before July 1, 1994--the interest 
rate may not exceed 9 percent: Pursuant to section 428C(c)(1)(B) of the 
HEA, 20 U.S.C. 1078-3(c)(1)(B), the interest rate is the weighted 
average of the interest rates on the loans consolidated, rounded to the 
nearest whole percent.
    2. FFEL Consolidation loans made on or after July 1, 1994, for 
which the consolidation loan application was received by an eligible 
lender before November 13, 1997: Pursuant to section 428C(c)(1)(C) of 
the HEA, 20 U.S.C. 1078-3(c)(1)(C), the interest rate is the weighted 
average of the interest rates on the loans consolidated, rounded upward 
to the nearest whole percent.
    3. FFEL Consolidation loans for which the consolidation loan 
application is received by an eligible lender on or after November 13, 
1997--the interest rate may not exceed 8.25 percent: Pursuant to 
section 428C(c)(1)(D) of the HEA, 20 U.S.C. 1078-3(c)(1)(D), the 
interest rate for the period July 1, 1998, through June 30, 1999, is 
8.25 percent (5.16 percent plus 3.1 percent equals 8.26 percent which 
exceeds the 8.25 percent cap).

Electronic Access to This Document

    Anyone may view this document as well as all other Department of 
Education documents published in the Federal Register, in text or 
portable document format (pdf) on the World Wide Web at either of the 
following sites:

http://ocfo.ed.gov/fedreg.htm
http://www.ed.gov/news.html

    To use the pdf you must have the Adobe Acrobat Reader Program with 
Search, which is available free at either of the previous sites. If you 
have questions about using the pdf, call the U.S. Government Printing 
Office toll free at 1-888-293-6498. Anyone may also view these 
documents in text copy only on an electronic bulletin board of the 
Department. Telephone: (202) 219-1511 or, toll free, 1-800-222-4922. 
The documents are located under Option G-- Files/Announcements, 
Bulletins and Press Releases.

    Note: The official version of this document is the document 
published in the Federal Register.

(Authority: 20 U.S.C. 1077a and 20 U.S.C. 1087e).

    Dated: July 6, 1998.
David A. Longanecker,
Assistant Secretary for Postsecondary Education.
[FR Doc. 98-18267 Filed 7-6-98; 2:40 pm]
BILLING CODE 4000-01-P